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Oct. 13, 2021, 4:22 p.m. EDT

Dow ends flat, S&P 500 and Nasdaq snap 3-session skid after Federal Reserve minutes point to looming tapering plans

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By Joy Wiltermuth and Mark DeCambre

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“Wednesday’s still elevated consumer-price index marks about six months worth of hot inflation data, suggesting that inflation is not as transitory as many investors previously expected,” wrote Nancy Davis, founder of Quadratic Capital Management, in emailed comments on Wednesday.

Corporations have been increasingly mentioning the impact of pricing pressures on earnings updates and investors have been eagerly listening for guidance from C-suite executives on the outlook for inflation.

JPMorgan Chase /zigman2/quotes/205971034/composite JPM +0.89% results were better than Wall Street forecasts on earnings per share as it released another $2.1 billion of loan loss reserves. Its shares, however, fell 2.6%.

On the flip side, if other major banks release loan loss reserves, that’s a bullish sign about the health of the U.S. economy, Wicker said.

“I think the pattern has been signaling the coast is pretty clear,” he said. “We really didn’t experience the kind of loan losses that a year-and-a-half ago we had to prepare for.”

Read: Will bank stocks’ wild rally continue? Here are the numbers to watch in this week’s earnings

Analysts expect S&P 500 index earnings to rise 27.6% annually, a pace markedly slower than a 52.8% gain in the first quarter and 92.4% in the second quarter, which both benefited from favorable comparisons with the start of the COVID-19 pandemic last year. Bank of America has warned that guidance from companies could be ugly amid a “make or break quarter.”

Opinion:   Beating the market would still be tough even if you knew the S&P 500’s earnings before everyone else

Despite Wednesday’s inflation data, Davis said Fed officials were unlikely to change their views on tapering, with it likely ending purchases by the middle of 2022 as it gears up to eventually normalize interest rates.

“The Fed is already expected to announce its tapering plans and the central bank likely wants to preserve optionality with their hiking cycle, Quadratic’s Davis said.

Which companies were in focus?

How did other assets trade?

  • The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.04% , a measure of the currency against a basket of six major rivals, fell 0.5%.

  • U.S. oil futures lost steam, with the benchmark /zigman2/quotes/209723049/delayed CL00 +0.79% closing 0.3% to settle at $80.44 a barrel. Gold futures /zigman2/quotes/210034565/delayed GC00 -0.15% closed 2% higher to settle at $1,794.70 an ounce.

  • The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.02% closed 0.7% higher, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.17% gained 0.2%.

  • The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.97% rose 0.4%, while Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +2.09% lost 0.3%.

Barbara Kollmeyer contributed reporting

/zigman2/quotes/205971034/composite
US : U.S.: NYSE
$ 146.61
+1.30 +0.89%
Volume: 14.12M
Jan. 28, 2022 4:00p
P/E Ratio
9.55
Dividend Yield
2.73%
Market Cap
$429.43 billion
Rev. per Employee
$497,080
loading...
/zigman2/quotes/206679220/composite
US : U.S.: Nasdaq
$ 166.81
+5.61 +3.48%
Volume: 10.32M
Jan. 28, 2022 4:00p
P/E Ratio
21.19
Dividend Yield
1.63%
Market Cap
$181.36 billion
Rev. per Employee
$745,911
loading...
/zigman2/quotes/200327741/composite
US : U.S.: NYSE
$ 38.28
-0.06 -0.16%
Volume: 12.89M
Jan. 28, 2022 4:00p
P/E Ratio
92.17
Dividend Yield
0.00%
Market Cap
$24.54 billion
Rev. per Employee
$404,041
loading...
/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
97.22
-0.04 -0.04%
Volume: 0.00
Jan. 28, 2022 4:59p
loading...
/zigman2/quotes/209723049/delayed
US : U.S.: Nymex
$ 87.29
+0.68 +0.79%
Volume: 419,868
Jan. 28, 2022 4:59p
loading...
/zigman2/quotes/210034565/delayed
US : U.S.: Nymex
$ 1,792.30
-2.70 -0.15%
Volume: 211,839
Jan. 28, 2022 4:59p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
465.55
-4.78 -1.02%
Volume: 0.00
Jan. 28, 2022 11:03p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,466.07
-88.24 -1.17%
Volume: 1.46M
Jan. 28, 2022 4:57p
loading...
/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,361.44
-32.81 -0.97%
Volume: 29.09B
Jan. 28, 2022 3:00p
loading...
/zigman2/quotes/210597971/delayed
JP : Nikkei
26,717.34
+547.04 +2.09%
Volume: 0.00
Jan. 28, 2022 3:15p
loading...

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